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In order to legally release a game for a Nintendo system a developer had first to obtain permission from Nintendo. Nintendo reserved the right to preview the games and demand changes before allowing release. They wanted to ensure that no game released for a Nintendo system had objectionable or offensive themes, as well as exercise quality control. This gave rise to a highly developed system of censorship. A game sold on a Nintendo system could not display or make reference to illicit drugs, tobacco and alcohol, violence against women, blood and graphic violence, profanity, nudity, religious symbols, political advocacy, or "sexually suggestive or explicit content."

In 1988, a creature in Nintendo's own Super Mario Bros. 2 the miniboss named Birdo was described in the original instruction manual as thinking he was a girl and wanting to be called "Birdetta". This was later censored by Nintendo of America in future appearances of the character. In 1992, the Enix Corporation was ordered to remove a gay bar in Dragon Warrior III, among other content changes, before the game could be sold on a Nintendo system. The SNES version of Ultima VII also had to be substantially altered from its original computer edition to remove potentially objectionable content, like ritual murders, or the option to have a male or female "bedmate" if you paid your fee at the buccaneer-run island.

By 1999, Nintendo had largely given up on its own censorship policies. A year later, Rare released Banjo-Tooie for the Nintendo 64 with a gay frogbartender named "Jolly Roger." The frog wanted Banjo and Kazooie to rescue his co-worker, Merry Maggie, a cross-dressing amphibian who appeared to be Jolly Roger's lover. Jolly Roger would return as a playable character in the Game Boy Advance game Banjo-Pilot (2005). Rare would also release Conker's Bad Fur Day (2001) for the Nintendo 64, featuring an alcoholic squirrel named Conker and his adventures in a world where all of the characters are foul-mouthed creatures who made various dirty jokes in reference to hangovers, homosexuality and oral sex. Enix re-released Dragon Warrior III for the Game Boy Color and was allowed to keep all the original content provided that was given a Teen rating by ESRB.

By 1992, Sega was coming close to claiming Nintendo's first place status in the industry. As with Nintendo, Sega policed the content of games for Sega systems. Unlike Nintendo, Sega's system of censorship was more liberal. The Sega content code allowed games to have blood, more graphic violence, female enemies, and more sexually suggestive themes. It is unclear whether or not Sega allowed LGBT themes or characters into a game sold for one of its home console systems.

Sega itself choose to tone down, if not erase, LGBT characters who were in the Asian edition of the game, when the game was developed for a different market. In Phantasy Star II, a helpful town's musician's homosexuality was edited so that the only acknowledgment of his sexual orientation was the fact that he charged less money, for his music lessons, for the male characters, then the female ones.

Yet, it unclear how much of this censorship was part of an overall censorship policy or the voluntary decision of a developer. In 1993, Sega developed the Video Game Rating Council to give content based ratings to all games sold on a Sega system, thus reducing the need for Sega to maintain a content code for its developers.

When Rise of the Dragon was developed for the Sega CD, by Dynamix, Inc., a transgender bar patron was retained from the original computer edition as was a gay joke relating to the playable character mistaking his girlfriend for a man with long hair. For this, and other reasons, the game was given the Council's "MA-17" rating.

This would seem to suggest that LGBT characters or themes, even when relatively asexual or comical in nature, were treated, by Sega and its developers, as intrinsically mature sexual themes, that were to be avoided unless the game was being marketed to older players.

A number of recurring tropes, themes or archetypes have developed in the gaming industry with reference to LGBT sexuality. These themes or archetypes were often similar to how other forms of popular culture such as Hollywood movie and TV shows dealt with LGBT sexuality.

The most common way to deal with LGBT characters was to reveal their sexual orientation through gender inversion. A male character's homosexuality could be indicated by making him a sissy character, with effeminate or flamboyant mannerisms, dress, and speech. This technique was widely used in Hollywood movies (to circumvent the Production Code's ban on "sexual perversion"), and before that in Vaudeville. The underlying assumption is that homosexuals tend also to be transsexual, and therefore possess mannerisms stereotypical of the opposite sex. The censorship codes of Nintendo and Sega limited the usage of gender inversion to exclusion of cross-dressing until 1994.

The video game character Doctor N. Gin is portrayed as an effeminate character in Radical's Crash Tag Team Racing. He is shown occasionally wearing a ballerina costume to boost his self-esteem and using pink fuzzy slippers in his inventions in the same game.[1] In the following Crash of the Titans, N. Gin reveals his desire for "chicks" over his factory's intercom,[2] but is disgusted at the thought of girls in a later cutscene.[3]

In 1988, LJN released the Nintendo game Beetlejuice, based on the popular movie of the same name. In the movie, Otho (Glenn Shadix) was a heavy-set interior decorator who was clearly gay. Otho makes a brief appearance in the game where the player must scare him with a mouse.

Computer games had their own sissy characters, used in the same fashion. The major difference was that computer games had more freedom to create these sissy characters closer to the models long since used in Hollywood or in Vaudeville, due to the absence of any universal content code.

Sierra's 1991 game The Adventures of Willy Beamish features a bouncer who has recently gotten out of prison for some unknown crime. The hero refers to him as a "tinker bell" when he is afraid to help fight a group of teenagers in a street gang. Thus the link between homosexuality and effeminacy is made explicit here.

Squaresoft's SNES RPG, Chrono Trigger, featured a major villain who was prominently transgendered. The character Flea, a henchman of Magus along with Ozzie and Slash, was described as looking like a girl. Flea would exclaim "Hey, I'm a guy!" and later "Male or female, what difference does it make? Power is beautiful, and I've got the power." Flea would later appear with his sidekicks in the sequel, Chrono Cross, appearing as a female with a pink wig and miniskirt. However, the battlescreen in Chrono Cross displays the enemies' sex with a male or female symbol, and Flea is clearly marked as a man. It is notable that the transgendered theme of Flea appeared in the US translation of the SNES release, before the ESRB came about and during Nintendo's censorship phase.

In 1995 Shannara, based on the books written by Terry Brooks, included a snotty and racist gay character: The Seneschal's attire is all purple, and he looks similar to real life actorTim Curry. This character was similar to the snotty and racist elfen character in Simon The Sorcerer 2 who not only had the purple attire, but a pansy flower in his hat.

In most cases computer games introduced homosexuality through situational gender inversion (usually men cross-dressing) for its humorous effect; it may allow the programmers to include a scene where two women, one a man in drag, express love for each other. For example, in the LucasArts game Monkey Island 2: LeChuck's Revenge (released in 1991), the playable character, Guybrush Threepwood, needed to win a pink dress in order to get into his ex-girlfriend's costume party. Guybrush then tried to persuade his ex-girlfriend to give him a second chance, and a piece of a treasure map. The third game in the series (released in 1997) had a much briefer puzzle involving a large pirate wearing a pink dress in a theatre production.

Another example appears in Sierra's Space Quest IV: Roger Wilco and the Time Rippers, (from 1991) Roger Wilco had to don drag in order to gain access to a bank account belonging to the "Latex Babes of Estros." While such situational cross dressing had been a popular source of humor in computer games, video games could not include such themes until the creation of the Entertainment Software Ratings Board in 1994.

From the beginning Hollywood movies found having the central character dress up in drag to be a surefire source of humor. Yet more modern movies have also used the crossdressing to offer a liberal social commentary about sexism or homophobia; e.g. Victor/Victoria, Tootsie, To Be Or Not To Be, and The Birdcage. By contrast, computer games only used cross-dressing for its comedic value.

Some computer games focused on the humor value of homosexuality without employing the sissy trope. For example, in Adventuresoft's Simon the Sorcerer series, if Simon is ordered to proposition any male characters, he would remind you that he "prefers blondes". The games also make numerous gay jokes. For example, when two demons get stuck together with glue in the second game (from 1995), Simon remarks that their close contact looks "awfully suspicious." Simon the Sorcerer 3-D (2002) has more gay jokes, directed at a gay knight. Computer games would pepper dialogue with gay jokes, alongside the sissy characters and the situational gender inversion for comic relief. Computer games still introduce homosexuality through this comic rubic.

In Grand Theft Auto: San Andreas the police officers in San Fierro will say various things one would expect from a comical, homosexual character such as "Drop the soap, honey!", "Lets wrestle to submission!", and "I'm on your ass, Daisy!" In this model, homosexuality is a joke, attached to gender inversion and used to denigrate the police, an enemy in the game. Grand Theft Auto III has construction workers who look like the similarly-dressed member of the Village People, who would shout quotes from YMCA and In The Navy. Other "Grand Theft Auto" titles would have obscure references to a city park where some of the adult patrons go to engage in public homosexual sex acts.

Perhaps one of the most flagrant instances of using gay or homoerotic imagery in a comedic way is the Cho Aniki series, an unusual group of games that uses such themes in such an exaggerated way that players regard it as a parody. The games, which have been released for various systems over the last decade, most often take the form of side-scrollingshooters starring Samson and Adon, two musclebound, phallic-looking characters who fire white globular shots from holes on top of their bald heads. The games were never released outside of Japan. In Japan, they are regarded as examples of the kuso-ge — or "shit game" — genre, which are enjoyed purely for their kitschy badness.

The second theme for dealing with LGBT sexuality arose in the 1990s; the sissy characters were replaced by dark and decadent predatory homosexuals.

Rise of the Dragon (Sierra Online - 1990) features a man named "Blade Hunter" on a quest to seek revenge against an Asian crime lord for the drug overdose of the mayor's daughter. His quest took him into various locations in a seedy and corrupt future similar to the one depicted in the movie Blade Runner. In the "Pleasure Dome", homosexuality exists as one of the vices catered to by the establishment. One of the patrons of this bar is a "woman posing as a man, posing as a woman", a clear nod to the 1982 movie Victor/Victoria. Like the male sissy characters that seemed to adopt the typical female gender, this woman adopts a typical male personality of being cold and un-feeling. Later on in the game, Blade Hunter says sweet things to someone whom he thinks is his girlfriend, and is shocked to find out that it is really a man with long hair. After this embarrassing event, the character worries that people may start to call him "Switch Blade."

Infinite Adventures produced a FMV game titled Dracula Unleashed (1993, and re-released on DVD in 2002) with one Alfred Horner as the 'rather odd fellow' who co-owned the bookstore. This would be the first time a sissy character in a computer game was shown as a live actor. However, the character is explicitly homosexual, giving the playable character lecherous glances.

In 1995 The Orion Conspiracy became the first computer game to use the word homosexual as Devlin McCormack lives on a space station, trying to investigate the murder of his son and stop an alien invasion. His investigation leads him through the seedy, criminal underworld of the station, where he discovers that his son was homosexual when talks with his son's boyfriend.

In 1996, Sierra Entertainment released a horror game titled Phantasmagoria 2: A Puzzle of Flesh. This game used FMV similar to Dracula Unleashed, but with much more graphic violence and gore. The playable character in the game was Curtis Craig, a man who was bisexual, demonstrated by the fact that he maintains relationships with his best friend Trevor, his girlfriend Jocilyn, and Therese, a patron at the local S&M club. This would be the first time that the playable character was set up as a bisexual. Creators of the game talked about the mature sexual themes in the game during a 1997 interview.

In 1996, Vic Tokai brought a graphic adventure computer game titled SilverLoad over to the PlayStation. Silver Load is a graphic adventure game with plenty of blood and graphic violence; a bizarre tale of a town cursed because their ancestors enacted genocide on an American Indian tribe. It features a gay barber who finds the cowboy hero attractive, and has a sinister, decadent look about him, similar to the gay co-owner of the bookstore in Dracula Unleashed.

In 2001, Capcom resuscitated this dormant theme with Resident Evil Code: Veronica, a game in the survival horror genre. The central antagonist is named Alfred Ashford; at the game's end he is revealed as a "cross-dressing freak" who is obsessed with his dead twin sister.

Where as the sissy characters were supposed to make the audience laugh, these predatory characters' homosexuality was intended to shock the audience, making them perceive the characters, and the civilization to which they belonged, as scary, perverse and immoral.

Some games have used homosexuality in terms of gay bashing. Sierra On-line released the first of its many Leisure Suit Larry games in 1987 (it was a graphical adaptation of an older text adventure Softporn, from 1981). In this game one plays a sexist, unattractive man trying to seduce attractive women. Early in the game Larry walks into a bar, where he can try to pick up one of the (heterosexual) male patrons, who would in turn kill him. In the 6th game in the series, Larry is flirted by a gay hotel employee. If he accepts his invitation, the game ends with the two walking off into the sunset holding hands.

Other games allowed the player to respond to homosexuality with violence. In 1999, the websiteSkateboard.com had an online game in which the player shot at an image of professional skateboarder Ed Templeton, who would tell you that he was a "faggot." The real Ed Templeton is not gay, and the game was eventually pulled off the website.

In 2003, Running With Scissors produced Postal² where the player character runs around a small Arizona town killing people of various sizes and races. The player had the option of going into a gay bar and opening fire on the occupants. The company defended the game by pointing out that the player does not have to kill gay characters and that the gays in the bar will fire back. In reality, all people in all areas of the game can be shot at, and one of the locations happens to be a gay bar; the company has further defended itself saying that those who are out to find something to be offended by will criticize Postal².

A gay bar is a symbol of organized gay life and that is something that the industry has been nervous to show. Yet, gay bars have appeared in games. Sierra Online gave us the first peek at a gay bar when it released Police Quest IV (1993, updated in 1996). In this game, created with guidance of former police officer Darryl F. Gates, you play a cop trying to track down the murder of his police partner. His quest led him to discover that his partner had a double life as a cross-dresser at a West Hollywood transgender bar. The game also has a Neo-Nazi who will call you a "mother loving faggot" if you touch him. The game is noteworthy as it tried to offer the realism that would later be found in Grand Theft Auto, but from the point of view of a police officer. Leisure Suit Larry: Magna Cum Laude, released in 2004, featured another gay bar.

Before the introduction of the ESRB, a handful of computer games in the 1980s and early 1990s had LGBT characters that existed as secondary characters but were neither intended as comic relief, nor as indications of the dark and seedy underbelly of the game's environment.

In 1986, Infocom released Moonmist, a text adventure mystery with several possible randomly-selected plotlines; in one of these plotlines the criminal is an artist who is jealous because her girlfriend has gotten married.

In 1992, Sierra On-line produced Laura Bow In The Dagger of Amon Ra which featured a woman from a small town who gets a job for a New York paper in the 1920s. Two of the women she meets are involved in a secret love affair.

In 1993, MicroProse Software released Return of the Phantom with a gay male character named "Charles". While he is certainly an effeminate theatre director, he is also one of the good guys that helps the playable character, a French inspector, solve the mystery of the Phantom of the Opera once and for all.

In 1995, the 1967 science fiction story I Have No Mouth, and I Must Scream was made into a graphic adventure game of the same name. In both the original story and the game, the character Benny was a brilliant, attractive, gay scientist who, by the AM computer, was horribly mutilated, mentally reduced to a childlike temperament, with large sexual organs, and turned into a heterosexual [2].

In 1994, EarthBound, Jeff Andonuts' best friend, Tony, is hinted to have romantic feelings for him; the creator of the game has also admitted Tony is gay.

LucasArts would also include a gay uncle who owned a mink factory and raised a girl when her father abandoned her in Full Throttle (1995).

In 1996, the adventure game titled Harvester, had a flamboyant gay firefighter named Fireman Sparky, although it is possible that all the firemen are gay.

In 1996, Crystal Dynamics released Blazing Dragons for the PlayStation. It was a graphic adventure game based on a Britishcartoon where dragons had human emotions and real humans were obnoxious villains. Much like the computer game Sorcerer, Blazing Dragons was influenced by comedians such as John Cleese of Monty Python fame. This game marketed the introduction to the video game industry of the comic models that the computer game industry had been using to reference homosexuality.
The game featured a dragon knight whose homosexuality was demonstrated by his effeminacy and vanity, and an entire puzzle involved dressing as the princess of the dragons in order to trick the dragon king into thinking that she has not run away and been kidnapped by humans. When this fails, it falls to the court jester (who also appears to be homosexual) to wear drag; at one point he kisses one of the other dragon knights, while off camera. This game marked the first time when drag, in the comic model, was allowed to appear in video games.

In Final Fantasy VIII, an unnamed minor character can be encountered in a bar; during conversation, there is a strong implication that the character is a transvestite. The player character Squall is given the option to ask if s/he is really a woman. If Squall asks this the character becomes paranoid and wonders how he knew. Final Fantasy VII has a specific puzzle that involves the playable character collecting various articles of female attire in order to audition as the girl that will spend the night with a male character. If the player has found enough items they are chosen as the girl and can play along with the scenario to a certain extent, although the couple is interrupted just as they are about to kiss. One of this articles, a wig, is found in a gym of gay male body builders, and the character can also enter a brothel. Depending on which room in the brothel is chosen the character may end up in a hot tub with around 10 men, including the character Mukki, who seems to preposition the main character both in this scene and when you meet him later on in the game.

In 1997, The Last Express, has you meeting two young adult girls on the train who are almost always in each other's company. While at first they appear to be merely close friends, reading the diary of one of them suggests they are lesbians, but there are no explicitly homosexual gestures beyond hand-holding.

In Gabriel Knight 3, it becomes very obvious that two of the characters, Lady Howard and Estelle Stiles, are lesbians. However, nothing is ever made of this other than Gabriel noticing the one bed for two people and saying "Gee, isn't that cozy?"

In 1998, Interplay released Fallout 2 featuring the first same-sex marriage in a game. The reaction from the family of the character the player marries is very negative.

In 1999, Funcom released the computer graphic adventure game The Longest Journey with a lesbian landlady, her long-time lover, and a gay cop. While the game used a futuristic Blade Runner type setting, the gay characters were not used to show how decadent society had become but were seen as normal and well adjusted secondary characters.

That same year, Acclaim released a racing game titled South Park Rally, the first of several games based on the popular animated series South Park for the PlayStation, Nintendo 64, and PC. Big Gay Al, a prominent character in the series, is a playable character in South Park Rally. His house is also one of the tracks.

That same year Activision released Star Trek: Voyager Elite Force for the PC and PlayStation 2. In the game you could play as a male or a female, and in either case a female would flirt with you. Elite Force was notable in this regard, as the Star Trek franchise has often been criticized for its treatment of gay and lesbian characters on TV.[4]

That same year Tri-Ace released Star Ocean: The Second Story for the Playstation 2. In the game you could choose to play as either Claude or Rena, and you have a Friendship and Romance level with each party member you acquire. Depending on those levels, you get about five endings. If you chose Claude, there was an ending where you go on a "man-date" with a member of your party by the name of Ashton. The date ends with Ashton's bizarre obsession of barrels. But it still does occur. One of the other possible endings is with Noelle, another male party member. He is very effeminate and certain scenes give him the possibility of being gay. If you chose Rena as your main character, you could get an ending with a female member of your party, Precis, where the two would go on a date. There is also a somewhat secret scene, where a love potion gets used on you, and Celine makes advances toward you. This is completely due to magic, and is mostly a source of comedy.

2001's Shadow Hearts contained a homosexual character, a Chinese acupuncturist known as Meiyuan who improved the weapons of your characters and did so with more enthusiasm for the male characters. Shadow Hearts: Covenant in 2005 also featured gay characters: the two flamboyant Magimel brothers, who were a constant sight throughout the game. One was a tailor who would sew magical clothes when bribed with beefcake trading cards, the other was a vendor for items and weapons. In one optional scene toward the end of the game, a third major character was revealed to be gay; the ensuing offscreen anal sex was largely treated as disgusting, though one female player character called it "beautiful."Shadow Hearts: From the New World again featured Gerard, but he is with his boyfriend this time, by the name of Buigen. They both are clad in biker clothing.

That same year Fable came out for the Xbox and PC as a long RPG game that followed various characters from cradle to grave. In the game, the player could flirt with characters of the same sex, enter into same-sex marriages, and have sex with them. If the player married a female character in addition to a male NPC, the personality status screen would label them as bisexual. If the player does not get married at all, the personality status screen does not have a default sexual orientation and instead leaves that trait unlabeled. While the NPC's in the game do not treat the player with any disgust if they choose to be gay, they do not get paid "dowry" for marrying any male characters but almost all female ones give such. One quest involves finding the deeds to a bordello so you can free the prostitutes from the male owner. Like the other quests in the game there are several ways of solving this, but one option is to dress as a woman and have sex with the owner when he's drunk.

The Atari computer game The Temple of Elemental Evil (2004) made news headlines when it was revealed that the game has an optional story line where the player can rescue a gay pirate and see him marry one of the male player characters.

That same year Tri-Ace, released Star Ocean: Till the End of Time, the third installment in the Star Ocean series: Nell, one of the playable characters has lesbian subtext with Claire her mentor, which appears in two endings of the game. Even when beating the game with the highest affection for Nell, the main character does not end up with Nell, and you see Nell with Claire. There is no actual scenes between the two, but it is implied throughout the game.

In the computer game Vampire: The Masquerade - Bloodlines (2004), you are able to play a female character and have implied (off screen) sexual relations with Jeanette, another female character. Also there is generally the possibility to flirt with same sex partners throughout the game and additionally there are also some more hints, that different characters have been involved in same-sex-activities. There is also a vampiress character who briefly mentions a relationship she had long ago with a female named Pisha.

One of the more recent instances occurs in Eidos's 2005 sequel to Deus Ex, Deus Ex: Invisible War. One of the manners which the character can gain access to the apartment of Seattle's Minister of Culture is to flirt with the Minister of Culture at Club Vox (he will give the character his key). Although there is a gender choice available in the game, this method works only if the character is male.

In the 2005-released Xbox RPG Jade Empire, the main character can be either male or female. If the player chooses a male character, he can have a romantic relationship with the female characters Dawn Star or Silk Fox, or the male character Sky; a female character can romance either Sky or Silk Fox. Also, if the main character is male, it is possible for Dawn Star and Silk Fox to end up in a relationship with each other.

The computer and console game Fahrenheit/Indigo Prophecy (2005) includes a gay stock market follower named Tommy. One of the game's protagonists is good friends with him and Tommy's knowledge of the stock trade is essential in progressing in the game. If asked, the character makes comments about homophobia in the workplace and gay acceptance.

In Persona 2: Innocent Sin, released in 1999 for the PlayStation, one of the playable characters was Kurosu Jun, a schoolboy with a connection to the game's main villain. Jun is a homosexual, and it is revealed through flashbacks that he and the main character, Suou Tatsuya, exchanged gifts as children and promised to always be together. Both Tatsuya and Jun have kept these gifts, and Tatsuya is often seen playing with the lighter he received from Jun. Through the actions of the player, Tatsuya could end up in a relationship with one of three romantic interests; one of these was Kurosu Jun. If Tatsuya and Jun are in a relationship, they receive a special "lovers" contact combo. The game has several references to Jun's femininity—his main weapons are flowers; there is a contact combo where another love interest, Lisa Silverman, puts makeup on Jun and then complains that he looks prettier than she does; and he apparently discovered his ability to use Personae when he was being picked on by bullies for his effeminate looks.

Persona 2: Innocent Sin was never released in America, but the sequel Persona 2: Eternal Punishment was. Jun appears in this game under the name Kashihara Jun, but his role in the story is extremely tangential. Suou Tatsuya also appears in the game, but though there are many references to the homoerotic content of the first game, the storyline focuses around a love triangle between him, his brother, and Amano Maya, a female love interest from Innocent Sin. Eternal Punishment also featured a female athlete named Anna, whose relationship with her obsessive admirer Noriko contains lesbian overtones.

Also, in Persona 3, there is an NPC, an unnamed female student, who has an intense lesbian crush on Mitsuru Kirijo, one of the main female characters. This crush goes as far as her having romantic fantasies about her, as well as threatening the main character with revenge (if he's lying) after he tells her that he has pictures of her in a bathing suit

In 2007 first-person shooterBioshock, it is hinted throughout the game that the character Sander Cohen, a temperamental artist gone mad through genetic experimentation, is homosexual, and that he was deeply in love with the game's antagonist Andrew Ryan before the events in the game take place. This is hinted both through audio logs that the player snaps up where various people refer to him as "old fruit" and such, as well as through radio messages where even Sander Cohen himself refer to Andrew Ryan as the "man I once loved".

While gay, lesbian, and bisexual characters frequently appeared in games from the 80s and early 90s, there were relatively few transsexual characters, as the sissy characters and situational gender inversion was used to label a male character as being gay and not being transgender.

As mentioned above, the Super Mario Bros. 2 character Birdo was described as thinking he was a girl and wanting to be called Birdetta in early editions of the instruction manual. The character was changed to simply female until Smash Bros. Brawl reintroduced the concept of Birdo's gender being "indeterminate".

Capcom created Final Fight for the arcade in 1989. The beat 'em up involved the player picking among three fighters on a quest to save the mayor's daughter who was kidnapped by a criminal gang known as Mad Gear. In 1993, Capcom presented Nintendo with a version of the game for the 16-bit SNES. According to David Sheffs' book Game Over, Nintendo stated that Capcom could not have a female enemy as that violated Nintendo's ban on violence against women. Capcom countered that there were no female enemies in the game, revealing that the female characters Roxy and Poison were also in fact transsexuals. The characters were nevertheless removed from the SNES version. However, in 1993, Sega obtained the rights to release the game for their Sega CD. In a sign of Sega's more liberal polices, the female enemies could remain in the game, but with less-provocative clothing; also there could be no indication of their supposed transgendered status (Sega of America later removed a homosexual boss from the Western version of Streets of Rage 3).

In 2005, Coin-Op Museum published an online article asserting that the two female characters were not newhalfs, but conventional females. As evidence the article cited Guy's stage in Street Fighter Alpha 2 (Capcom characters would frequently appear in other Capcom games) and the official Capcom artwork in Versus Books' Street Fighter Alpha 2 Strategy Guide.

Day of the Tentacle featured a futuristic beauty contest that featured oddly-dressed humans. A person the player can interact with is some Harold who is dressed like a woman and expresses homosexual attraction. The sprite of the character is based on the one of George Washington, who also appears in the game.

Nintendo published Baten Kaitos; Origins for the Nintendo Gamecube also features a transgendered character, of sorts. One of the three main characters, Guillo, speaks simultaneously with the voice of both a man and a woman, and is gender neutral throughout the entire storyline. Even though Guillo is a "puppet", Guillo has a very masculine personality, yet also is clad in high heels and has breasts. Guillo is also part of a bitter love "quadrangle" for Sagi, the main character, between Guillo, Milly, and Lolo.

Squaresoft's Final Fantasy IX features a playable character called Quina Quen who belongs to an apparently ungendered race called the Qu. Referred to by the pronoun "s/he" throughout, the Qu's bizarre appearance offers little clue as to any intended orientation. At one stage in the game, it is possible for Quina and Vivi, an apparently juvenile Black Mage, to be married. While this scene is optional and treated very much as a light-hearted comic scene with no implication of sexual attraction, it nevertheless treats the topic of pansexuality and homosexual marriage sympathetically.

Many fighting games have characters who are either confirmed or suspected to be gay. Having gay male characters in these fighting games can challenge the traditional perception of homosexuals as weak. Nevertheless, hints about a particular character's sexual orientation in a fighting game often take the form of effeminate features, in an otherwise tough and stereotypically masculine character.

In 1994, Sega of America would make various changes to the beat 'em upStreets of Rage 3 from its original Japanese counterpart called Bare Knuckle 3. Among the changes was the removal of the boss named Ash (with a straight character named Shiva replacing him) whose homosexuality was explicitly established by the "Village People" attire that he wore. Ash was taken out of the western edition of the game, but remained a playable character with the aid of the Game Genie. Thus, Sega unintentionally became the first major video game company in the west to give the player the option of choosing a gay character.

In the Guilty Gear series the character Venom is most clearly in love with his deceased leader, Zato-1, although his feelings do not seem to have been returned. The character Bridget, the effeminate crossdresser bountyhunter, is maybe shown to have strong homosexual tendencies, though nothing is known about it.

Rockstar Games' Bully (Canis Canem Edit in Europe) features optional homosexual content. The game's central character Jimmy Hopkins can kiss various characters, male and female, in order to regain health. Neither Hopkins nor any of the other six bisexual/homosexual male characters show any outward signs of overt femininity or other stereotypically homosexual traits, with the possible exception of the gay member of the "preppy" clique who is depicted as being suave and somewhat effeminate. All of these characters will, if romanced, assist Hopkins in fighting if necessary. It is perhaps noteworthy however that while taking English classes will allow Jimmy to kiss certain female characters without offering them gifts, the same is not true of the male characters. One of the female characters in the game alludes to Jimmy's 'experimentation' with the other boys in a cut scene in which she states, 'I'm like Helen of Troy, but you seem more interested in boys named Troy'. In Bully: Scholarship Edition, developers added an achievement (an in-game award) called "Over the Rainbow", which the player unlocks by kissing a boy twenty times.

In Fire Emblem: Radiant Dawn, there is a character named Heather you can get on your team who is implied to be a lesbian, who claims to have joined the army to 'meet all the pretty girls'. It is also speculated by some that the main character, Ike, may be gay due to his multiple rejections of women throughout the game. And also due to the fact that if Ike and Soren attain an A support level, they will run away together at the end of the game.

In the 2007 game Mass Effect, you can play as a male or female character. In both cases, there is an option for a subplot romance and sexual encounter with the alien Liara, a member of a truly unengendered (though they resemble females) race that mates with any sex of any race. The game received a lot of criticism for the "sex scene", although it was hardly explicit, showing only brief, blurred shots of Liara's buttocks twice in a thirty-second scene.

Abu'l Nuquod, one of the assassination targets in the historically-based game Assassin's Creed, is strongly implied to be gay. He believes the people hate him because he is "different", is shown caressing the cheek of one of his male guards during his angry tirade, and claims that he cannot serve the cause of a god who calls him an abomination.

The casual games market is not regulated by the ESRB and therefore has few or no official content restrictions. However, these games are generally marketed as 'family friendly' and aim for mass-market appeal, often leaving out any elements that might be considered controversial.

Summon Night: Swordcraft Story if you play as a female character and chooses Sugar as your summon beast, lesbian innuendos would occur. There are other girls, named Razzy and Sanary who also shares lesbian undertones when conversing with Pratty, the female main character.

Within the United States there is a perceived market of affluent homosexual young men. In part, companies seeking this pink dollar, seek to present an image of being supportive of gay rights causes or charities. The pink dollar has been a subject of debate within the LGBT community. LGBT supporters of capitalism tend to support private companies seeking the pink dollar, and feel that it will help create a better environment for gay people in and out of the workplace. LGBT supporters of communism or socialism tend to be critical of the pink dollar, objecting to its exclusive focus on male homosexuals, and to the implication that LGBT people should become integrated into American institutions of capitalism and the nuclear family.

The video and computer gaming industry has been slow to grab the pink dollar, with Maxis being the first to enter into this new market. It is generally felt that young white males (specifically, heterosexual ones) are the force driving the industry forward. Hence any effort to market games to anyone else is tied to an industry question, "Will heterosexual men want to buy this game?" In the 1990s the industry began to make some efforts to market games to women by creating software titles with strong and independent female characters as seen in Tomb Raider and Resident Evil. The commercial success of both games (and their numerous sequels) does suggest that male gamers are willing to play a female character. Yet, it remains to be seen if a straight male would be willing to play an openly gay or transgender character, as they generally are willing to play sexy and powerful female characters.

In 2001, Maxis broke new ground with a new television commercial for its computer game The Sims. Highlighting the ability of the characters to date, the commercial featured an attractive twenty-something man in a nightclub flirting with a woman, until he is suddenly drawn to an attractive man in the club and after a brief pause agrees to date him. The games have become very popular as they allow the player to create their own simulated family, whose members could be either gay or straight and still date, make love, marry and raise children. This is perhaps the first and only time the industry has made any attempt to capture the gay gamer dollar.

However, despite the inclusivity found on other platforms, Nintendo's Game Boy Advance and DS versions appear to have removed any same-sex romance interactions, effectively removing homo/bisexuality from the games.

Little is known about what it is like to work within the industry as a gay person. People within the industry do not want to talk about it, and gay rights organizations have been slow to pay much attention to this billion dollar industry. The result is that much of the information that does come out is in dispute. Dani Bunten, an MTF transsexual, designed some of the earliest multiplayer games. In 1996, a Maxis employee named Jacques Servin was fired when he put gay characters into the SimCopter game. Depending on the news source, Servin claims to have done it because he was upset at being grossly overworked at Maxis or as some type of political statement. The firing of an openly gay employee sounds worse than it is, as Maxis would go onto produce the popular and gay-friendly Sims computer games. Yet, for some unknown reason, gay people that worked in the video and computer game industry are cautious about coming forward.

Most US games are made for a US audience. However, Japan, Korea and Taiwan all have large gaming industries which produce for local audiences. Many video games are developed in Japan, and some effort has been made at making what could be called 'gay games.' In Japanese popular culture men were often bishōnen, which translates as "beautiful boys." This was also tied to the success in Japan of comic books and animation with gay, lesbian, bisexual and transgender characters who are either openly or subtly gay. A select genre of adult pornographic Japanese games exist called H-games. This genre includes gay male and gay female subgenres. This material generally does not make it over to the west in English, and western reviews of the gay male video games tend to see the homosexuality as a gimmick in an otherwise mediocre game. Yet, this may be a source for further study on the issue of gay characters in video and computer games. However, homosexuality, while relatively innocuous among celebrities in Japan, is still considered an oddity for an allegedly "average" male or female, due to Japan's very regimented and conservative social structure.